Daily Chronicle: As Vermont ages into retirement, worker and revenue shortages expected

By Guy Page

The percentage of Vermonters in their prime working years of ages 25-64 will drop below 50 percent by 2030, a new demographic study says.

In other words, prime working-age Vermonters will be a minority. While Vermont’s total population will remain stable, its age and working status are in for big changes, and soon. When the youngest “baby boomers” hit retirement age by 2029, one in four Vermonters will be senior citizens.

Guy Page

That’s the main prediction of a demographics study, “Population Changes and Vermont State Revenue,” published Dec. 6 by the Vermont Tax Structure Commission of the Vermont Joint Fiscal Office. The report is long on data but doesn’t delve into comprehensive solutions. Key takeaways include the following:

Income tax revenue will drop. Baby boomers ages 55-64 now generate more than a quarter of state personal income tax revenue. The blow of lost revenue may be softened as some people choose to work into their 70s. But overall Vermont should expect not only less income tax revenue, but less sales tax revenue. Senior citizens don’t buy as much stuff as young people or those in their prime. They’re more interested in health care, cash donations, and frugality. However, overall consumption revenue is likely to remain stable through 2030.

Vermont’s taxation of senior income will buffer revenue losses. It’s a policy long decried by frugal senior citizens: Vermont taxes social security and other forms of senior income. As the baby boomer “cliff” approaches, that policy may be a plus from a revenue point of view. Vermonters who don’t move to Florida and other tax-friendly states must (barring a change in Vermont tax law) pay retirement income taxes. Add in the likelihood that Vermont seniors are fairly wealthy and may work longer than expected, and Vermont’s revenue slide may be more gentle than in senior tax-exempt states, the study said.

School revenue may suffer. The Vermont Education Fund relies heavily on the sales tax. As seniors spend more on non-taxable items like health care and cash contributions to charity, and less on consumer items, school revenue may decline.

In-migration of working people is critically important. Not for the first time in the state’s history, officials are concerned about a worker shortage. “States with low birth rates (like Vermont) must rely on domestic and international migrants in order to maintain or grow their population and achieve generational balance,” the study found.

Foreign immigration rate is already five times native birthrate in northern New England. “A July 2019 analysis from the Federal Reserve Bank of Boston illustrates the growing importance of immigration to northern New England. The study shows the three states added nearly 60,000 immigrants from 1990 to 2017, a growth rate of 63%, while the region’s native-born population increased by less than 12%.”

In short, Vermont will need new workers to generate tax revenue and to support the economy. People think the worker shortage is bad now? In the eldercare business alone, just wait until the demand for both in-home and nursing home care skyrockets, even as the employee pool continues to shrink. Other state studies have suggested drawing eldercare workers from bi-lingual, nearby Quebec. Pay increases for elder care providers may be proposed.

But that’s a discussion for another day. The Dec. 6 study firmly establishes one fact: As Vermont gets older and grayer, there will be employment and state revenue consequences.

Read more of Guy Page’s reports at the Vermont Daily Chronicle.

Image courtesy of Wikimedia Commons/Jamain
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8 thoughts on “Daily Chronicle: As Vermont ages into retirement, worker and revenue shortages expected

  1. It’s concerning to me that our supermajority thinks the solution to everything is more taxes, fees and regulation. They fail to see that people have left and are leaving to enjoy their retirement. As I get close to doing so myself, I have my eyes set in Tennessee.
    They should also be concerned that the younger generation that we now have doesn’t have a clue as to what an honest day’s work is. “Instant gratification, a cell phone app or riding the coat tails of other” is how they do it. When we older folk are gone, the ones who actually work, I see a lot of people who are screwed because they haven’t figure it out yet.

  2. So when you don’t want to face the facts, that you’re an inept Government that refuses
    to be business-friendly, probably 20 years too late to change now…. inept is being kind !!

    So you blame the retirement crowd, yes they retired because we once had a vibrant business
    base in the state, so what happened. ??

    Oh, yeah Liberals stormed the Statehouse with all their foolish policies forcing Business to
    find a friendlier atmosphere like fewer taxes & regulations.

    The second concern ” revenue” shortage, don’t worry the masterminds in Montpelier must
    have that under control with there newly found “Pot ” of gold….commercial pot …….Idiots.

    As far as the retiree burden on the state,don’t worry most are heading to greener pastures.
    yup, heading South………. fun in the sun along with their portfolios !!

    Maybe the potheads can clean up the States ” Unfunded Liabilities ” issue ???? Nah !!

    Wake up Vermont

  3. The state of Vermont is aging and losing it’s workforce, boo hoo, what else is new? Guess what? Maybe it’s time for the state to finally die a quick death. The state is bankrupt? This fact has not stopped the progressives from looking for more revenue enhancement (taxes). Perhaps it’s time for the state to head for the bankruptcy court and ask for protection. Newsflash: cut out the immigration schemes to save your sorry rear ends. Vermont does not need immigration from overseas to add to our already burdened police force (I’m addressing you Mr. Page!). Everything in life dies, it’s time for Vermont to die too.

  4. We live in a state where they want to tax everything possible and they are driving vermonters out of here

    The solution to this problem by our Rino Governor Phil Scott and his socialist buddies is to pay people with our hard-earned tax dollars to move into this state and continue to text the hard-working residents more and more

    This is no longer the wonderful state of responsible people that we grew up in …. we have been invaded and destroyed by the surrounding states and their liberalism.

    With the next election we will either elect real conservative Republicans to save our state or we will lose it forever

    I encourage everyone to study the candidates and if they are rhinos or liberals please do not elect them only elect those that have voted for good Republican values in the past and will continue to do so in the future

    Beware of false prophets

  5. The legislature has been aware of this approaching issue for a long time. John McClaugrhy of the Ethan Allen Institute wrote about this some time ago. Like always some in the Legislature who have been there for years will pretend they’re surprised and say they are going to address the issue. I have no reason to expect anything beneficial to the seniors in this state as a result of this information. The state is more concerned with enabling younger people to become dependent upon the state for everything.

  6. I’m retired and leaving. If they want me to stay, they have to treat me like other states do. — the vermont I grew up in, doesn’t exist anymore.

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